On this page last week I argued that Barack Obama’s first budget showed him to be more of a left-leaning liberal than I and many others – sceptics and admirers alike – had previously supposed. People I respect have accused me of going off the deep end about this, or of neglecting Mr Obama’s tactical finesse, or both.

Mr Obama is calling for little that he did not promise in the campaign, I am reminded, so he cannot be accused of springing a surprise. I welcome many of the budget’s main elements, notably healthcare reform and the cap-and-trade system for carbon emissions, and the president made it clear all along that he wished to reverse the Bush tax cuts for the high paid. So the revelation that Mr Obama is a progressive liberal must arise from the proposal to curb high earners’ income-tax deductions. That was a surprise, but a small matter: hence the charge that I am getting carried away.

Alternatively, I am told, Mr Obama is playing a shrewder game. Like any good negotiator, he has adopted a maximalist opening position. He expects to be walked back from it, ending up where he wanted to be in the first place, with a more centrist plan than the one he pitched.

On the first point, the tax-deduction proposal is not so small. Instead of applying the highest marginal rates of tax to each deduction, the plan would apply a 28 per cent rate. This is equivalent to a tax increase of roughly $35bn (€28bn, £25bn) a year on households earning more than $250,000. Hardly chicken feed, it is roughly half of the amount raised by returning high earners’ marginal rates to their pre-Bush levels.

Not everybody would regard two-earner households with an income of $250,000 a year as rich; and many of the taxpayers in question have seen their retirement savings, college funds and housing equity destroyed. The scandal of widening inequality that still animates the Democrats’ thinking is a story about the top fraction of one per cent of the income distribution, not the top end of the middle class. Also, it is out of date: as though the housing and stock market meltdowns had never happened, the budget raises taxes on the “rich” to where they were before the Bush administration – and then some.

Granted, other things being equal, reducing the value of tax deductions – not just for the highest earners, but for every taxpayer – makes sense. It broadens the tax base and requires lower marginal tax rates for any given amount of revenue raised. But look at Mr Obama’s proposal in context. He is not broadening the base to lower marginal rates. He is raising marginal rates on the highly paid, and increasing their effective tax rate by rolling back deductions. The measure is an unexpected element of redistribution in a package that was highly redistributive to begin with.

Standing back, the budget’s two great innovations are healthcare reform, an enormous undertaking only partly paid for in the plan, and cap and trade, a big new source of revenue. A centrist administration might have married the two – arguing, correctly, that a public investment as costly and far-reaching as healthcare reform should impose some costs on most taxpayers, not just on a few million at the top. Instead, the revenues from cap and trade are spent mainly on wage subsidies and tax cuts tilted toward the working poor. The down-payment on the cost of healthcare reform is financed by an additional tax increase on the rich.

A centrist administration would have thought about how to create a political constituency for cost control in health, and in public spending more generally. The administration rightly emphasises that healthcare cost control is the single biggest challenge in fiscal policy. Without it, public debt will stay on its present unsustainable path until it hits the wall of a new financial crisis. The need to create a wider constituency for fiscal discipline is the best argument for associating healthcare reform with a new and broadly based tax. Instead, the budget makes this already small constituency even smaller, telling almost all taxpayers they can have everything for nothing.

This message comes through loud and clear in the budget taken as a whole. Mr Obama is not a centrist – unless the second point is correct and I am underestimating Mr Obama’s tactical intelligence. His political skills are undeniable. Yet I find the view that you make a phoney offer and aim to be bargained down difficult to credit.

The question is, who is Mr Obama supposed to be bargaining with? If the answer were a Republican-controlled Congress, this theory might be worth entertaining. Scare conservatives with a pitch for social transformation – a new New Deal – then settle for a judicious nudge to the left. But the bargains Mr Obama needs to strike are not with Republicans, who for the moment are clueless, leaderless and powerless. The people he needs to do business with are members of his own party – and unless I am much mistaken, those people are liberals.

Some Democrats have qualms about his plans for spending and taxes — and about his push to change so much so quickly.

By Peter Nicholas
Los Angeles Times
March 8, 2009

Reporting from Washington — President Obama is facing misgivings about his policy agenda from inside his own party, with prominent Democrats objecting to parts of his taxation and spending plans and questioning the White House push to do so much so fast.

Obama’s strategy is to advance on all fronts. Buoyed by favorable poll numbers, he is moving to jolt the economy with a massive stimulus package, revamp the healthcare system and push the nation toward renewable energy sources.

One of the most powerful men in the United States, Harry Reid is also a frequent subject for debate. His rail project to protitution and vice is a case in point. The Republicans’ biggest nightmare is also sometimes the Democrats’ biggest nightmare….

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The majority leader may be the most powerful Democrat in the U.S. Senate and in Nevada history. But his clout has made him a top target for Republicans nationwide.

By Mark Z. Barabak
Los Angeles Times
March 7, 2009

Reporting from Carson City, Nev. — When Senate Majority Leader Harry Reid came home recently to address the Nevada Legislature, a small but vocal band of Republican protesters gathered at the state Capitol. They waved signs, razzed Democrats and marched outside.

But the group fell silent when asked the chances of ousting Reid at the polls next year. “It’s going to be tough,” demonstrator Carol Howell, 65, finally said.

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Harry Reid of Nevada, the top Senate Democrat, often talks of his clout in D.C. But across the country, conservative groups have formed with the express purpose of denying the Senate leader a fifth term. Photo: AP Lauren Burke

A Democratic official rebuked conservative commentator Rush Limbaugh on Friday for suggesting a health care proposal will be named in memory of Sen. Edward Kennedy, who is battling brain cancer. On his radio show, Limbaugh said President Barack Obama‘s proposed health care revisions will be championed by “the liberal lion Teddy Kennedy.”

Brian Wolff, executive director of the Democratic Congressional Campaign Committee, called the remark outrageous and reprehensible.

Limbaugh has been at the center of a partisan dispute since telling a conservative group last month that he hoped Obama’s economic policies would fail. Democrats have accused Republicans of letting Limbaugh be their de facto leader, which GOP officials deny.

Limbaugh did not respond immediately to a request for comment that was sent to the e-mail address provided on his Web site.

In this Tuesday, Jan. 13, 2009 picture, conservative talk show host Rush Limbaugh talks with guests in the East Room of the White House in Washington, prior to a Presidential Medal of Freedom ceremony for Colombian President Alvaro Uribe, former British Prime Minister Tony Blair and former Australian Prime Minister John Howard. Two days after calling Rush Limbaugh a mere ‘entertainer’ with an ‘incendiary’ talk show, Republican National Committee chairman Michael Steele apologized and acknowledged the radio commentator as a ‘national conservative leader’ on Monday, March 2, 2009.(AP Photo/Ron Edmonds)

The United States Senate came to its senses Thursday and refused a $410 billion measure that would have funded U.S. government operations until the end of this fiscal year in September. The “omnibus” bill, containing some 9,000 “earmarks” that critics call pork-laden, could not get enough votes in the Senate to pass.

This means a special continuing resolution will have to be passed today to keep the U.S. government operating at last year’s levels.

The omnibus will be considered again starting Monday.

After the more than $700 billion stimulus, the debate on health care, foreclosure bailout, bank bailout, the troubles of such giants as AIG and GM, lawmakers can apparently see that spending money we don’t have will now be the legacy of this administration and this Congress…

Add in a revolution in the energy sector, “cap and trade,” new taxes, and a tanking stock market and well, maybe the Senate is waking up….

Senator John McCain, Republican of Arizona, has criticized a $410 billion omnibus spending bill as being bloated with earmarks. Brendan Smialowski for The New York Times

We note that the New York Times blamed the lack of a vote on the omnibus on Republicans in their headline and first paragraph; admitting later that Republicans are joined by some Democrats who oppose this bill…..

Barack Obama’s newly named Economic Recovery Advisory Board, the real-world Americans being asked to help solve the nation’s financial crisis, includes a union executive who took the Fifth in a federal probe, a billionaire whose failed bank pioneered the subprime mortgage market, and deep-pocket donors who gave or gathered nearly $1.2 million for the president’s campaign.

By Jerry Seper
The Washington Times

In all, 11 of the 16 board members donated or raised money for Democrats in the last election, according to a Washington Times review of campaign finance records. They include the president and chief operating officer of the American arm of UBS Investment Bank, the Swiss-based bank now at the center of a widening tax evasion probe by the Justice Department and the Internal Revenue Service.

In announcing the board’s creation, Mr. Obama described its members as “distinguished citizens outside the government” who were qualified on the basis of achievement, experience, independence and integrity to “bring a diverse set of perspectives and voices from different parts of the country and different sectors of the economy to bear in the formulation and evaluation of economic policy.”

The board is headed by former Federal Reserve Chairman Paul Volcker, whose only political contribution last year was $2,300 to Mr. Obama.

“It is distressing to see the president turning to his heavy finance hitters as consultants,” said Craig Holman, legislative director for Public Citizen, a nonpartisan watchdog group that tracks political fundraising and its influence on government policy.

What Limbaugh clearly wants is for the president to fail in his apparent goal of bringing social democracy to our shores (through his nationalization of much of the economy and his onerous tax increases). Limbaugh wants this effort to fail because it will prevent economic recovery and the prosperity that has been allowed us by free-market economics. The whole controversy is a hoax. Yet now it is reliably reported that as many as a dozen top Democrats, some on the White House staff, are continuing this hoax and expanding it by trying to make reaction to Limbaugh an issue for the Republican Party to pronounce on.

Incoming White House Chief of Staff Rahm Emanuel gestures prior to the inauguration ceremony of Barack Obama as the 44th President of the United States, in Washington, January 20, 2009.(Jim Young – UNITED STATES/Reuters)

Four months after John McCain’s sweeping defeat, senior Republicans are coming to grips with the fact that the party is still – in stock market terms – looking for the bottom.

Republicans this week are processing two sobering new polls that found the party’s support reduced to a slim one-quarter of Americans. In the absence of a popular elected leader, its most visible figure is a polarizing radio host. Its strategic powerhouse is a still-divisive former House speaker forced from power 15 years ago.

And its hopes of demonstrating swift and visible change by pushing people of color to the fore have been dented by the stumbles of the party’s two most prominent non-white leaders, national Chairman Michael Steele and Louisiana Gov. Bobby Jindal.

R. Emmett Tyrrell wrote today in the American Spectator: “What Limbaugh clearly wants is for the president to fail in his apparent goal of bringing social democracy to our shores (through his nationalization of much of the economy and his onerous tax increases).”
See: Obama Can’t Revive Economy With Socialism

Radio host Rush Limbaugh has been vocal about his displeasure with President Obama’s policies.

Incoming White House Chief of Staff Rahm Emanuel gestures prior to the inauguration ceremony of Barack Obama as the 44th President of the United States, in Washington, January 20, 2009.(Jim Young – UNITED STATES/Reuters)

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By Timothy Egan

The New York Times
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Once upon a time, you could drive to the most remote reaches of the United States and escape Rush Limbaugh. But from the Mogollon Mountains of New Mexico to the Badlands of South Dakota, where only the delicious twang of a country tune or the high-pitched pleadings of a lone lunatic came over the AM dial, there is now the Mighty El Rushbo.

As someone who spends a lot of time on the road, I used to find Limbaugh to be an obnoxious but entertaining companion, his eruptions more reliable than Old Faithful. But now that Limbaugh has become something else — the face of the Republican Party, by a White House that has played him brilliantly — he has been transformed into car-wreck-quality spectacle, at once scary and sad.

Behold:

The sweaty, swollen man in the black, half-buttoned shirt who ranted for nearly 90 minutes Saturday at the Conservative Political Action Conference. He reiterated his desire to see the president of his country fail.

Filling a leadership vacuum in the beleaguered Republican Party has come the outspoken voice of talk radio king Rush Limbaugh, seen here in 2008, — and the Democrats cannot conceal their delight.(AFP/Getty Images/File/Stephen Lovekin)

In this Friday, Jan. 30, 2009 picture, former Maryland Lt. Gov. Michael Steele speaks after being elected the first black Republican National Committee chairman in an election by the RNC during their winter meetings in Washington. Two days after calling Rush Limbaugh a mere ‘entertainer’ with an ‘incendiary’ talk show, Republican National Committee chairman Michael Steele apologized and acknowledged the radio commentator as a ‘national conservative leader’ on Monday, March 2, 2009.(AP Photo/Pablo Martinez Monsivais)

Capitol lockdown and all-nighters can’t shake loose the one GOP Senate vote needed to pass the spending plan. Weary Democrats will try again this morning.

By Jordan Rau and Eric Bailey
Los Angeles Times
February 16, 2009

Reporting from Sacramento — Ending a weekend marathon of tense negotiations, bleary-eyed state lawmakers late Sunday suspended their bid to plug California’s $41-billion deficit but vowed to continue working today to halt the state’s dizzying slide toward financial collapse.

Despite support from legislative leaders in both parties, the budget deal became mired in politics. The two-day hunt for a third Republican in the state Senate willing to vote for $14.4 billion in temporary tax increases proved futile. Lawmakers and staff said there were enough GOP votes in the Assembly for passage in that house.